Shares of PepsiCo Inc. took a 0.9% hit in morning trading on Monday, following a downgrade by Wall Street's second-biggest bull. Morgan Stanley’s Dara Mohsenian cut his rating to equal weight from a “multi-year” run at overweight, expressing concerns that the stock has rallied too far.
A Shift in Outlook
After a "strong" second-quarter report on July 13, Mohsenian believes that the stock's recent outperformance has exhausted its catalysts, resulting in limited further upside. He downgraded PepsiCo but maintained his stock price target at $210, which is the second-highest among the 22 analysts surveyed by FactSet.
Vivien Azer of Cowen has the highest target at $220 for PepsiCo. However, Mohsenian's downgrade reflects a growing sentiment that the stock has reached its peak after an impressive rally.
While PepsiCo's shares have rallied 3.3% year to date, the Consumer Staples Select Sector SPDR exchange-traded fund (XLP) has lost 0.5%, and the S&P 500 (SPX) has seen a robust gain of 17.7%.
As investors reassess their positions in the beverage and snacks giant, it remains to be seen how this downgrade will impact PepsiCo's future performance.
Consumer companies assess positive spending trends while considering inflation risks. Kroger experiences surge in shares after selling stores to address merger...
London-listed money transfer company, Wise PLC, announces an upgrade to its income growth guidance for fiscal 2024 following a strong start to the year and incr...